Newark Cab Association v. City of Newark
901 F.3d 146
| 3rd Cir. | 2018Background
- Newark regulated taxis/limousines with licensing, medallions (capped at 600), driver qualifications, background checks, meter fares, inspections, and commercial insurance; only the City could enforce those rules.
- Uber entered a 2016 agreement with Newark allowing TNCs to operate without medallions, set their own fares, and use third-party background checks; Uber also agreed to pay the City and provide supplemental insurance.
- Taxi and limousine owners (plaintiffs) sued under 42 U.S.C. § 1983 and New Jersey law alleging: a Fifth Amendment taking, Fourteenth Amendment due process and equal protection violations, and state-law contract/estoppel claims; the District Court dismissed under Rule 12(b)(6).
- Plaintiffs claimed medallions have protected property value and that the Agreement unlawfully diminished that value and the exclusivity of the taxi market.
- The Third Circuit reviewed de novo and affirmed dismissal, holding plaintiffs lacked a cognizable property interest in medallion market value or exclusivity, failed to state a substantive due process claim, and failed to show irrational disparate treatment under Equal Protection; state-law contract/estoppel claims also failed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Takings Clause: did City effect a compensable taking by permitting TNCs to operate? | Medallions confer property rights including economic value and exclusivity; Agreement depressed medallion values. | No legally cognizable property interest in medallion market value or exclusivity; medallions not confiscated and use retained. | Dismissed — no taking: plaintiffs kept medallions and value diminution alone is insufficient. |
| Substantive due process: did City deprive plaintiffs of protected property without process? | Loss of medallion value and exclusivity are fundamental property interests. | Those interests are not ‘‘fundamental’’ property rights under federal substantive due process jurisprudence. | Dismissed — plaintiffs failed to allege a fundamental property interest. |
| Equal Protection (class-of-one): is disparate regulation of TNCs irrational? | Taxis and TNCs are functionally the same; distinctions are products of regulation and cannot justify unequal treatment. | City had rational bases: street-hail privilege for taxis, pre-arranged rides via apps for TNCs, different information available to passengers, and differing vehicle/driver risk profiles. | Dismissed — rational-basis review satisfied; taxis and TNCs not similarly situated for class-of-one purposes. |
| State-law contract/estoppel: did ordinances create contractual or promissory rights guaranteeing exclusivity? | Ordinances and medallion regime promised exclusivity/reliance protection; City breached those promises by permitting TNCs. | Ordinances do not plainly express an intent to create contractual rights nor a clear, definite promise for estoppel. | Dismissed — no contractual text or clear promise; promissory/equitable estoppel elements not met. |
Key Cases Cited
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972) (property interests are defined by existing rules or understandings, often state law)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr., 508 U.S. 602 (1993) (diminution in value alone generally insufficient for a taking)
- Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) (discussing regulatory takings and expectation of regulation)
- Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (mere unilateral expectation is not a protected property interest)
- Village of Willowbrook v. Olech, 528 U.S. 562 (2000) (class-of-one equal protection theory)
- Heller v. Doe, 509 U.S. 312 (1993) (rational-basis standard explanation)
- Nordlinger v. Hahn, 505 U.S. 1 (1992) (protecting legitimate expectation and reliance interests can be a rational basis)
- Prometheus Radio Project v. FCC, 373 F.3d 372 (3d Cir. 2004) (property-interest threshold for takings analysis)
- Am. Express Travel Related Servs., Inc. v. Sidamon-Eristoff, 669 F.3d 359 (3d Cir. 2012) (Takings Clause applies to state/local governments via the Fourteenth Amendment)